Officials sign Swiss-EU data exchange deal

Switzerland and the European Union have signed an agreement providing for the automatic exchange of banking information, effective 2018.

On Wednesday, Swiss State Secretary for International Financial Matters Jacques de Watteville signed the accord in Brussels along with EU Tax Commissioner Pierre Moscovici and Latvian Finance Minister Janis Reirs.

Before it can take effect, the agreement needs to be ratified in Switzerland – something that the Swiss authorities insisted on. The process could involve a referendum. The deal stipulates that from 2017, Swiss financial institutions will collect and transmit data to the Swiss tax authorities. Starting in 2018, the banks will share that information with the tax authorities of the relevant EU countries. The 28 EU member states will also be obliged to do the same for the Swiss.

Switzerland and the EU came to an initial agreement in March of this year. Nearly 100 countries have agreed to adopt the data-swapping model, which the Organization for Economic Cooperation and Development wants to establish as the global standard for fighting tax evasion.

The EU-Swiss accord will end banking secrecy for EU citizens who have offshore accounts in Switzerland. The inability of tax authorities to collect unpaid revenue due to banking secrecy has strained relations between Switzerland and countries like the United States, Germany and France. Banks like UBS and Credit Suisse have paid fines and handed over data to the US.

Switzerland already has withholding tax agreements with Austria and the United Kingdom. This year it also signed a data sharing deal with Australia.